Demand Forecasting in Indian Retail Industry

Vijay Gabale (07305004)

Ashutosh Dhekne (07305016)

Piyush Masrani (07305017)

Sumedh Tirodkar (07305020)

Tanmay Mande (07305051)

Applied Economics Course Project

Motivation

•The A.T. Kearney Global Retail Development Index shows

India on the top of the list.

•Multi-outlet retail concept has gained acceptance. A report

by Images Retail predicts Over 400 malls by 2010

•Competition: Survival of the fittest!

•Forecasting of demand!

Indian Retail Industry

•Retail - The sale of goods or commodities in small

quantities directly to consumers.

•Retailers in India

• Shoppers’ Stop

• Westside (Trent)

• Pantaloon (Big Bazaar)

• Lifestyle

• RPG Retail (Foodworld, Musicworld)

• Crossword

Challenges in Demand Forecasting

•Scale of forecast

•Erratic demands

•Introducing new goods

•Changing price

•Restocking period

How do we resolve them?

Techniques

Judgmental

• Unaided

• Delphi

• Expert Systems

• Simulated interactions

Quantitative

• Extrapolation

• Data mining – Least Square Regression

Existing Surveys

•The Indian Retail Report 2007 released by Kamal Nath on January,

09, 2007

•The India Retail Report 2007, Amitabh Taneja, Chief Convenor of

India Retail Forum

•An article by “Tata Strategic Management Group” in September, 2006

• India has huge population

• The forecasting plays major role in quantifying trends

• Sophisticated tools or expert analysts

Our Survey

•We visited Haiko, a division of the Lakewood Malls Pvt.

Ltd. at Hiranandani Gardens.

•Mr. Gaurav Purohit (Business Manager)

•Haiko

• Small scale retailer

• Do not use sophisticated tools but historical data to analyze trends

What are the key aspects of a forecasting exercise?

1. Beginning Early

2. Taking expert inputs

3. The tools used for demand forecasting cannot replace

domain expertise

4. Thinking of multiple solutions

5. Being on the field

Questionnaire

•How is the forecasting done?

• Past data and Targeted growth

• Tastes and trends are subjective terms

•What are some tips for developing a forecasting model for new

product?

• try out different forecasting techniques

•What is the period of time in the future for which you do forecasting?

• a six monthly basis, place orders at 2 months in advance

•Could you share with us an example story?

Questionnaire

•Does the volume of sale have a bearing on the rack space

you allocate to a good?

• They have a fixed rack space and that dictates how much they can stock.

•For all the analysis do you use software?

•Could you relate a failure story?

•The detailed interview in report!

Conclusion

•The increasing competition in Indian Retail Sector is

compelling retailers to use demand forecasting tools.

•Retailers who have their own brand labels use the

forecasting techniques of the kind we study in theory.

•On the other hand, small scale retailers can employ

qualitative techniques on the historical data and

considering the behavior trends in the market.

References

•Images retail. http://www.imagesretail.com/india retail report.htm.

•Tata Strategic Management Group. Retail revolution. http://www.tata.com/tata

strategic/articles/20060925 retail.htm.

•A.T. Kearney. Global retail development index (GRDI) 2004-2007.

http://www.atkearney.com/.

• Kamal Nath. India retail report. http://commerce.nic.in/pressrelease/pressrelease

detail.asp?id=1895.

•Namita Singh, S. Jason Olasky, Kellie S. Cluff, and Jr. William F. Welch. Supply chain

demand forecasting and planning. http://www.patentstorm.us/patents/7080026-

fulltext.html.

•Software & Consulting Services to the Consumer Goods Industry. Demand forecasting

model. http://www.ibsw.com/demand.htm.